LPL Financial (LPLA) AI Stock Analysis

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LPL Financial

(NASDAQ:LPLA)

Select Model

Neutral 60 (OpenAI - 5.2)

Rating:60Neutral

Price Target:

$319.00

▼(-0.17% Downside)

Action:ReiteratedDate:02/24/26

The score is held back mainly by deteriorating 2025 cash flow (negative operating and free cash flow) and weak technicals (price below key moving averages with negative MACD). Offsetting these are solid operational momentum highlighted on the earnings call (record AUM/EPS and strong organic net new assets) and a balance sheet that improved in 2025, though valuation remains relatively rich (P/E ~30) with little dividend support.

Positive Factors

Scale: Record AUM & Organic Growth

Record AUM ($2.4T) and $147B of annual organic net new assets create a large, recurring fee base. Durable AUM-linked advisory fees smooth revenue across cycles, enable cross-sell and pricing leverage, and underpin medium-term operating leverage as integrations drive scale benefits.

High Retention & Recruiting

Sustained 97% retention and meaningful recruited assets signal strong advisor stickiness and recurring revenue durability. High retention preserves fee-bearing AUM and reduces churn-driven volatility, while continued recruiting replenishes growth pipelines and supports stable organic fee growth over the next several quarters.

Strategic M&A & Synergy Potential

Commonwealth and other acquisitions materially expand scale and distribution, offering roughly $425M run-rate EBITDA upside. Successful integration and realized synergies can sustainably lift margins, diversify revenue channels, and improve long-term cash earnings as cost saves and cross-sell accrue.

Negative Factors

Deteriorating Cash Flow

A reversal to negative operating and free cash flow in 2025 weakens cash conversion and increases near-term funding risk. This deterioration limits internal capital for integration, buybacks or dividends, raises reliance on external financing, and heightens sensitivity to short-term working capital and investment timing.

Elevated Leverage

Debt running above equity and leverage near the midpoint of targets reduce financial flexibility. Elevated leverage magnifies earnings and market risks, constrains strategic optionality for further M&A or capital returns, and increases vulnerability to interest rate or revenue shocks during the integration period.

Integration & Retention Risk

Adviser sign-ups for Commonwealth are running in the low-80% versus a 90% target while transition assistance and amortization have risen. Prolonged adviser departures or slower pull-through can delay synergy realization, sustain higher G&A and TA expense, and compress margins over the next several quarters.

LPL Financial (LPLA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$24.72B

Dividend Yield0.32%

Average Volume (3M)1.04M

Price to Earnings (P/E)28.3

Beta (1Y)1.28

Revenue Growth35.19%

EPS Growth-18.62%

CountryUS

Employees9,118

SectorFinancial

Sector Strength70

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)5.23

Shares Outstanding80,080,180

10 Day Avg. Volume1,222,444

30 Day Avg. Volume1,036,291

Financial Highlights & Ratios

PEG Ratio-1.44

Price to Book (P/B)5.26

Price to Sales (P/S)1.65

P/FCF Ratio-28.62

Enterprise Value/Market Cap1.22

Enterprise Value/Revenue1.78

Enterprise Value/Gross Profit7.53

Enterprise Value/Ebitda13.87

Forecast

1Y Price Target

$450.50

Price Target Upside40.98% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering11

EPS Forecast (FY)23.73

Revenue Forecast (FY)$21.03B

LPL Financial Business Overview & Revenue Model

Company DescriptionLPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and auction rate notes. The company also provides advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market programs; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services to trusts for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.

How the Company Makes MoneyLPL Financial generates revenue through multiple key streams, primarily by charging fees for asset management and advisory services, as well as commissions from brokerage transactions. The company earns a significant portion of its revenue from advisory fees based on assets under management (AUM), which are recurring in nature and provide a stable income. Additionally, LPL collects commissions from the sale of various financial products, including mutual funds, ETFs, and insurance products. The firm also benefits from technology and transaction-based fees charged to advisors for using its proprietary platforms and services. LPL has established partnerships with various financial product providers, which enhances its offerings and contributes to its revenue through distribution agreements. Overall, the combination of fees from advisory services, commissions from transactions, and technology service revenue constitutes the primary drivers of LPL Financial's earnings.

LPL Financial Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Highlights income from different business lines, revealing which areas drive growth and profitability, and indicating strategic focus.

Chart InsightsLPL Financial's revenue segments show robust growth, particularly in Advisory and Commission, reflecting strategic expansion and successful integration of Commonwealth. The earnings call highlights record-breaking assets and a 25% increase in adjusted EPS, underscoring strong operational performance. However, challenges like high interest expenses and sluggish adviser movement could impact future growth. The company's focus on cost efficiency and asset retention, with a 98% rate, positions it well for continued success despite these headwinds.

Data provided by:

The Fly

LPL Financial Earnings Call Summary

Earnings Call Date:Jan 29, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:Apr 23, 2026

Earnings Call Sentiment Positive

The call presented a predominantly positive picture: record adjusted EPS, record assets under management ($2.4 trillion), strong full-year organic net new assets ($147 billion, ~8% growth), high retention (97%) and clear progress on strategic M&A (Commonwealth, Atria, Prudential) and operating efficiency. Key near-term risks highlighted include Commonwealth retention noise (adviser sign-ups currently in the low-80% of assets versus a 90% target), elevated transition assistance and TA levels, short-term recruiting cadence and timing for pipeline pull-through, modest yield pressure from recent rate cuts, and higher 2026 G&A driven by Commonwealth integration. On balance, the company’s material operational and financial wins and clear path to realize Commonwealth synergies outweigh the near-term integration and recruiting timing challenges.

Q4-2025 Updates

Positive Updates

Record Earnings per Share

Q4 adjusted EPS of $5.23, up 23% year-over-year, and record adjusted EPS for the fiscal year of $20.09, driven by organic growth and expense discipline.

Record Asset Levels and Strong Organic Asset Growth

Total advisory and brokerage assets reached a record $2.4 trillion (up 2% sequentially from Q3). Full-year organic net new assets were $147 billion (approximately 8% growth), with Q4 organic net new assets of $23 billion (about a 4% annualized growth rate).

Robust Recruiting and Retention Metrics

Q4 recruited assets were $14 billion (annual total $104 billion). Overall asset retention was 97% for Q4 and over the last 12 months. In Q4, the firm added ~ $13 billion in traditional markets and ~ $1 billion from expanded affiliation models.

Strategic M&A Progress and Scale Expansion

Completed onboarding/integration of Atria Wealth Solutions and signed/closed acquisition of Commonwealth Financial Network (largest deal in LPL history, adding ~3,000 advisers). Expect Commonwealth to contribute roughly $425 million of run-rate EBITDA once fully integrated.

Improved Profitability and Margins

Q4 gross profit of $1.542 billion (up $62 million sequentially) and adjusted pretax margin of ~36%, reflecting operating leverage from organic growth and cost discipline.

Client Cash and Fee Revenue Strength

Client cash balances ended Q4 at $61 billion (up $5 billion sequentially). Client cash revenue was $456 million (up $14 million sequentially). Service and fee revenue was $181 million in Q4 (up $6 million sequentially) with an expected ~ $25 million sequential increase in Q1 due to fee changes (providing an ongoing ~$35 million quarterly benefit / ~$140 million annually).

Operating Efficiency and Controlled G&A

Core G&A for the full year was $1.852 billion, below the low end of prior guidance. Prior to Prudential, Atria and Commonwealth, core G&A grew ~4% in 2025—the lowest level of growth in several years—demonstrating progress on efficiency initiatives.

Employee and Brand Momentum

Launched a national marketing campaign and reported highest employee engagement scores in nearly a decade, supporting adviser acquisition and retention efforts.

Capital Position and Leverage Management

Leverage ratio was 1.95x at the end of Q4 (near midpoint of target range), corporate cash of $470 million, and management signaling potential to revisit share repurchases as leverage sits at midpoint and Commonwealth integration progresses.

Negative Updates

Commonwealth Retention Uncertainty and Adviser Departures

Press suggested retention running below the 90% asset retention target; management reports advisers representing low-80% of assets have signed to stay so far (management continues to expect ~90% asset retention once onboarding completes). Some adviser headcount departures have been publicized and remain an area of focus and risk.

Recruiting Pipeline Timing and Near-Term Pull-Through

While pipelines are near record levels, they are weighted toward early/mid-stages. Recruiter focus on Commonwealth retention slowed organic recruiting in the near term, and pull-through timing could take months (3–12 months depending on adviser type), delaying a return to prior recruiting run rates.

Market Rate Cuts Impacting Yield

ICA yield was 341 bps in Q4, down 10 bps sequentially due to October and December rate cuts. Management expects the full-quarter impact of the Q4 rate cuts to lower ICA yield by another ~10 bps in Q1, pressuring cash-related revenue.

Elevated TA and Transition-Related Costs

TA (transition assistance) levels spiked after the Commonwealth announcement and remain elevated in the marketplace. TA loan amortization was $133 million in Q4, up $28 million sequentially (driven by Commonwealth-related transition assistance and recruiting), with expected further modest increases in Q1.

Near-Term Expense Increase from Commonwealth Integration

2026 core G&A guidance includes ~$380–$390 million of full-year incremental expenses related to Commonwealth, lifting overall 2026 core G&A to $2.155–$2.210 billion and implying underlying core G&A growth (pre-Commonwealth) of 4.5%–7%—an acceleration vs. 2025's ~4% growth.

Corporate Cash Decline and Short-Term Liquidity

Corporate cash declined to $470 million (down $99 million sequentially), which combined with integration and acquisition spend may constrain near-term capital return timing despite leverage at midpoint of target range.

Competitive Pressure on Recruiting Economics

Competition in the recruiting market remains aggressive, with elevated TA offers and other upfront economics in the marketplace; management remains disciplined but notes the competitive environment could pressure recruiting metrics and economics in the near term.

Company Guidance

The company guided to continued operating progress in 2026 with specific near-term and full-year metrics: Q1 core G&A is expected to be $540M–$560M and full‑year core G&A is guided to $1.775B–$1.820B before Commonwealth (Commonwealth adds ~$380M–$390M, bringing total 2026 core G&A to $2.155B–$2.210B); Q1 TA loan amortization is expected to rise ~ $5M (Q4 TA amortization was $133M) and Q1 depreciation & amortization to rise ~$5M (Q4 D&A $105M); promotional expense was $76M in Q4 and is expected to be roughly flat in Q1. Financial and business outlook drivers include total AUM at a record $2.4T, Q4 organic net new assets $23B (~4% annualized) and FY organic NNA $147B (~8%), recruited assets $14B in Q4 ($104B for the year), 97% asset retention (Q4 and LTM), client cash $61B (up $5B Q/Q) with client cash revenue $456M in Q4, ICA yield 341 bps (down 10 bps Q/Q with a ~10 bps full‑quarter headwind expected in Q1) and ICA fixed‑rate mix ~55% (targeting low‑ to mid‑60% as balances normalize). They reiterated Commonwealth onboarding on track with an expected run‑rate EBITDA of ~$425M when integrated, Q4 adjusted EPS was $5.23 (record; $20.09 for the year) with adjusted pretax margin ~36% and Q4 gross profit $1.542B; corporate cash was $470M and leverage ~1.95x (near midpoint), and management said the fee change will add ~ $35M of service & fee revenue per quarter (≈ $140M annualized) with Q1 service & fee revenue up ~ $25M sequentially.

LPL Financial Financial Statement Overview

Summary

Income statement shows strong revenue momentum (score 74) but weakening profitability with margin compression and lower net income in 2025. Balance sheet is mixed (score 63): equity improved in 2025, but leverage remains meaningful. Cash flow is the biggest drag (score 34) with operating cash flow turning negative and free cash flow more negative, raising near-term funding/working-capital risk.

Income Statement

Positive

Revenue growth has accelerated over the period, with 2025 revenue up strongly versus 2024, indicating solid top-line momentum. However, profitability has weakened: gross, operating, and net margins stepped down meaningfully in 2025 versus prior years, and net income declined despite higher revenue. Overall, the income statement reflects good growth but a softer profitability profile recently.

Balance Sheet

Positive

Leverage remains elevated with debt running above equity, which increases sensitivity to market/earnings volatility. A key positive is the sizeable improvement in equity in 2025, which helped reduce the debt-to-equity ratio versus 2024. Returns on equity have been strong historically but cooled in 2025, pointing to less efficient profit generation on a larger equity base.

Cash Flow

Negative

Cash generation deteriorated sharply in 2025, with operating cash flow turning negative and free cash flow falling further into negative territory versus 2024. This represents a notable reversal from earlier years that included strong positive operating and free cash flow (e.g., 2022). While cash flow can be lumpy in this industry, the most recent year shows weak cash conversion and higher near-term funding/working-capital risk.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	16.99B	12.39B	10.05B	8.60B	7.72B
Gross Profit	4.35B	3.37B	3.05B	2.37B	1.71B
EBITDA	2.18B	2.11B	1.99B	1.53B	936.43M
Net Income	863.02M	1.06B	1.07B	845.70M	459.87M
Balance Sheet
Total Assets	18.49B	13.32B	10.39B	9.48B	7.99B
Cash, Cash Equivalents and Short-Term Investments	1.13B	1.01B	541.76M	884.28M	514.92M
Total Debt	7.26B	5.75B	3.96B	2.95B	3.05B
Total Liabilities	13.15B	10.39B	8.31B	7.31B	6.32B
Stockholders Equity	5.34B	2.93B	2.08B	2.17B	1.67B
Cash Flow
Free Cash Flow	-981.78M	-284.94M	109.33M	1.64B	237.15M
Operating Cash Flow	-411.40M	277.59M	512.61M	1.95B	453.13M
Investing Cash Flow	-2.39B	-1.59B	-860.19M	-376.40M	-458.64M
Financing Cash Flow	3.17B	1.42B	-208.53M	-504.27M	278.84M

LPL Financial Technical Analysis

Technical Analysis Sentiment

Negative

Last Price319.55

Price Trends

50DMA

358.97

Negative

100DMA

355.61

Negative

200DMA

360.98

Negative

Market Momentum

MACD

-14.66

Positive

RSI

39.39

Neutral

STOCH

39.17

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LPLA, the sentiment is Negative. The current price of 319.55 is below the 20-day moving average (MA) of 347.31, below the 50-day MA of 358.97, and below the 200-day MA of 360.98, indicating a bearish trend. The MACD of -14.66 indicates Positive momentum. The RSI at 39.39 is Neutral, neither overbought nor oversold. The STOCH value of 39.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LPLA.

LPL Financial Risk Analysis

LPL Financial disclosed 32 risk factors in its most recent earnings report. LPL Financial reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

LPL Financial Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IBKR	78 Outperform	$32.03B	32.40	20.41%	0.46%	11.88%	28.96%
TW	78 Outperform	$28.53B	32.04	13.20%	0.45%	22.17%	40.13%
RJF	71 Outperform	$30.64B	15.22	17.11%	1.26%	6.45%	5.85%
SCHW	70 Outperform	$165.47B	20.03	18.11%	1.07%	5.90%	66.60%
SF	69 Neutral	$11.51B	19.24	11.72%	1.43%	7.54%	2.73%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LPLA	60 Neutral	$24.72B	28.28	20.86%	0.32%	35.19%	-18.62%

* Financial Sector Average

Performance Comparison

LPLA

LPL Financial

319.55

-50.94

-13.75%

IBKR

Interactive Brokers

74.56

23.67

46.50%

RJF

Raymond James Financial

159.68

7.03

4.61%

Stifel Financial

78.48

8.49

12.12%

SCHW

Charles Schwab

97.52

18.96

24.13%

Tradeweb Markets

121.96

-12.90

-9.56%

LPL Financial Corporate Events

Business Operations and StrategyExecutive/Board Changes

LPL Financial appoints Somesh Khanna to board

Positive

Jan 8, 2026

On January 5, 2026, LPL Financial Holdings Inc. elected Somesh Khanna to its board of directors as an independent director, a move announced publicly on January 8, 2026. Khanna, currently a senior advisor at McKinsey & Company and executive co-chair of technology services firm Apexon, brings more than 30 years of consulting and financial services leadership, including senior roles in global banking, digital strategy and organizational transformation, as well as prior CEO experience in a digital trade receivables securitization business. He also serves on the boards of KeyCorp and Persado. LPL’s board chair, Jim Putnam, highlighted Khanna’s deep expertise in digital transformation, artificial intelligence and data-driven strategic planning as directly aligned with LPL’s growth trajectory and ongoing efforts to innovate for financial advisors, institutions and their clients, suggesting his appointment could strengthen the firm’s strategic positioning in technology-enabled wealth management. Khanna’s addition to the board, combined with his advanced management and engineering education, underscores LPL’s focus on leveraging digital and AI capabilities to support advisors and enhance productivity across its large, advisor-centric platform.

The most recent analyst rating on (LPLA) stock is a Buy with a $444.00 price target. To see the full list of analyst forecasts on LPL Financial stock, see the LPLA Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 24, 2026